Income inequality at lowest recorded level, but poverty and deprivation remain high for lone parent families

Inequality in disposable income stood at its lowest recorded level on the eve of the pandemic, with the Gini coefficient – a common measure of inequality – 16 per cent below its 1987 level in 2019. However, measures of income poverty and material deprivation also point to the consistently high incidence of low-living standards among lone-parent families.

These are among the main findings of the first report in a new annual series published today by the Economic and Social Research Institute (ESRI). The report – funded by the Community Foundation for Ireland – brings together data from household surveys collected by the ESRI and the Central Statistics Office to create the first harmonised set of indicators on incomes, income inequality and poverty covering the period 1987 to 2019. These will be published on the ESRI website and can be used by policymakers, academics, journalists and the wider public to inform discussions around income inequality, poverty and deprivation.

Other key findings of the report include:

• Disposable income growth has been extremely strong and progressive, if volatile: Despite a lost decade between 2007 and 2017, income growth over the last three decades has been remarkably strong, averaging more than 3 per cent per year in real terms. Income growth has also been broad-based and progressive, rising by 3.6 per cent per year on average for the lowest-income fifth of people compared to 2.7 per cent for the highest-income fifth.
  
   
• The incidence of income poverty and material deprivation remains closely linked to the absence of anyone in paid work: despite making up only 11 per cent the population in 2019, those aged under 65 living in a household without anyone in paid work make up more than half of those below the poverty line and a third of those living in material deprivation. This is different to countries like the UK, where poverty has increasingly become an in-work phenomenon.
  
   
• This should give rise to concerns about the impact of COVID-19 related job losses: our research suggests that rates of income poverty and deprivation could rise significantly if those who have lost work during the pandemic are unable to return to their previous positions or find new ones by the time enhanced pandemic supports are withdrawn.

Barra Roantree, an economist at the ESRI and lead author of the report, said:

“Ireland is one of the few European countries to have experienced broad-based growth over the past three decades. Disposable incomes rose by more for lower-income than higher-income people, leading to big declines in income inequality between 1987 and 2019.”

Bertrand Maître, a Senior Research Officer at the ESRI and another author of the report said:

“Despite this growth, high rates of poverty and deprivation exist among lone parent families and those in households where no one is in paid work. These rates have been an enduring feature of Irish society since at least the early 1990s. This should raise concerns about the impact of COVID-19 related job losses, particularly if those who have lost work are unable to return to their previous positions or find new ones for an extended period of time.”

Denise Charlton, CEO of The Community Foundation for Ireland added:

“Research and evidence are key when finding responses which work to the key challenges for people, families and communities across Ireland. This new series by the ESRI gives us that research and through the development of indicators an ability going forward to track the impact of policies on communities. This report highlights some stark realities facing people in the wake of COVID-19. As we move from crisis to recovery it is important that the decisions we take now are informed by these realities and that no group or person is left behind or excluded.”